Investor Report Brazil: Dangerous game

Sep 1, 2012

There are growing signs that all is not well with the Brazilian economy. A rapid increase in household indebtedness and a surge in credit growth have investors worried

By Thierry Ogier

Guido Mantega, Brazil’s finance minister, has
been piloting policy in Latin America’s largest
economy for the past six years. He likes referring to himself
as a player who passes the ball to his teammate, who then
smashes it into the net and scores – a kind of GDP
catalyst.

But the Brazilian economy has faced an uphill battle in
2012, and the year may end without any goals at all.

Brazilian monetary and fiscal authorities had predicted a
long duration, low-intensity crisis in the eurozone. But this
has spread dangerously from the periphery to the core of the
single currency area. "The European crisis has proved even
stronger than we originally envisaged, even though it rather
looks like a long period of agony than a sudden heart attack,"
Mantega tells LatinFinance.

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